Iraq’s Oil Production Drops by 70% Amid Escalating Gulf Shipping Crisis

Sharp Decline in Iraq’s Oil Output Amid Gulf Conflict

Oil production in southern Iraq has experienced a dramatic reduction, falling by 70% since the onset of the conflict involving the United States, Israel, and Iran. Current daily output stands at approximately 1.3 million barrels, a significant drop from the pre-war figure of 4.3 million barrels per day.

An official from Basra Oil Company, which is responsible for marketing the majority of Iraq’s southern oil, revealed that storage facilities have reached their limits. The remaining oil production, after substantial cuts, is now being directed to supply domestic refineries.

Impact of Strait of Hormuz Disruption

Iraq was the first major oil producer to implement production cuts due to the disruption of tanker movements through the Strait of Hormuz. These reductions began last week, and analysts have cautioned that other countries may soon follow as their storage capacities are exhausted. Shortly after Iraq’s move, both Kuwait and the United Arab Emirates also announced similar measures in response to the ongoing shipping paralysis.

Exports Severely Affected

Although Iraq continues to load crude for export, the volume is far below previous levels. Only two tankers were loaded at southern terminals on Sunday, each carrying about 2 million barrels. The vessels involved are the Cospearl Lake, registered in Hong Kong, and the Yuan Hua Hu, a very large crude carrier flying the Chinese flag. Data shows both ships remain in the Persian Gulf.

Iraq’s average daily oil exports have plunged from over 3.33 million barrels to just 800,000 barrels as of Sunday. An official from Iraq’s oil ministry described the situation as the most severe operational challenge the country has faced in more than two decades.

Oil Prices Surge Amid Supply Disruptions

The ongoing conflict and resulting disruptions in Gulf oil and gas supplies have sent prices soaring above $116 per barrel earlier today, with WTI reaching similar highs before both benchmarks retreated to below $110. Meanwhile, Middle Eastern Murban crude has climbed past $120 per barrel.

By Irina Slav for Oilprice.com

More Top Stories from Oilprice.com

• Oil Prices Surge Past $100 as Iran Names New Supreme Leader
• U.S. Gasoline Surges to Highest Under Trump as Iran War Roils Oil Market
• Europe’s Gas Price Set for Largest Weekly Gain in Three Years

Stay Ahead with Oilprice Intelligence

Oilprice Intelligence delivers timely insights before they make headlines. This expert analysis, trusted by seasoned traders and policy advisors, is available free twice weekly—helping you understand market movements ahead of the curve.

Gain access to exclusive geopolitical analysis, confidential inventory data, and market-moving intelligence. Subscribe now and receive $389 worth of premium energy insights at no cost. Join a community of over 400,000 informed readers.